Total transactions of China’s B2C market reached 240.07 billion yuan (USD 38.03 billion) in 2011, with an increase of over 130% compared to 2010.

Source: EnfoDesk, Analysis International

Also read:: China Q1 Online Payment Exceeded 212 Billion Yuan

China Online Payment Market Size 2006-2015e

China’s third party online payment continues to maintain strong growth in 2011 with an estimated total transaction exceeding 2 trillion yuan (2,203.8 billion yuan or USD 349 billion), up 118%.

China Online Payment Market Share in 2011

Alipay is still the dominant player in China’s online payment with 49% market share, followed by Tenpay and China Pay. Online shopping in China continued rapid growth in 2011, reaching 800 billion yuan.

Also read:: China Q1 Online Payment Exceeded 212 Billion Yuan

Top 10 China B2C Websites in 2011 by Growth of Orders

According to iResearch, the fastest growing B2C website in 2011 by total number of orders is womai.com (owned by China National Cereals, Oils and Foodstuffs Corporation; or, COFCO), followed by vjia.com (owned by VANCL) and yaodian100.com.

Also read:: Charts: China’s Top 10 B2C Websites in Q2 2011

Image by bfishadow via Flickr

Boston Consulting Group shared research findings this week predicting that China online shopping, will see exponential growth through 2015, with spending that could make China’s e-commerce market worth more than RMB 2 trillion and possibly surpass the size of the U.S. market.

Here is a summary of some findings of BCG survey:

• Less than 10 percent of China’s urban population shopped online in 2006. The figure jumped to 23 percent in 2010 and will nearly double to 44 percent by 2015.
• An astonishing 30 million additional Chinese consumers are expected to shop online for the first time every year until 2015.
• E-commerce in China will go from representing 3.3 percent of the country’s total retail value today to 7.4 percent in 2015. It took the United States ten years to achieve that growth.
• Within five years, most of today’s online shoppers in China will be spending RMB 6,220 (or about $980) per year, twice what they are today. That’s close to the U.S. average of $1,000.
• The low cost of shipping in China gives e-commerce an ongoing boost. It costs $1 on average to ship a 1-kilogram parcel, versus $6 in the U.S.

China's Rapidly Expanding E-commerce Market

Uniqueness of China E-commerce Market

• Up to a quarter of e-commerce demand in China is for products consumers cannot find in physical stores—a circumstance unique to China, where the immensity of the country limits the coverage of physical retailers. In fact, there are many consumers, especially the younger ones, whose first contact with a brand or type of product occurs on the Internet.
• The relationship between search engines and retail sites is different in China. In most markets, shopping begins with a Google search. In China, online retailing marketplace Taobao.com blocks the spider of the top search engine, Baidu.com. Therefore, most shoppers start their search within Taobao, which accounted for nearly 80 percent of e-commerce volume as of 2010. “Chinese shoppers are developing the habit of not relying on search engines to find products online,” said Jeff Walters, a Beijing-based principal at BCG and coauthor of the report.
• Largely because of consumer wariness and distrust of merchants, Chinese consumers are the most likely in the world to check for product recommendations on social networking sites. Forty percent of online consumers in China say they’ve read and posted reviews—more than double the rate in the United States. Conversely, only 19 percent of consumers in China go to official brand or manufacturer sites, compared with 41 to 60 percent in Japan, the United States, and the European Union.
• China’s shoppers are increasingly not just looking for discounted products as they shop online. Today they are also concerned with finding unique products that are not available offline, better customer service, convenience, and the pure fun of the discovery process that happens online.
• The concentration of the Chinese e-commerce market by category is much lower than in other countries, with the top-five categories only accounting for half of the total market (while in the United States, Japan, and the United Kingdom, that ratio is nearly 70 percent)
• Payments from consumers are held in escrow (Alipay) until the consumer receives the order
• The logistics of the e-commerce process is a top priority for consumers

BCG forecasts that e-commerce will go from representing 3.3 percent of total retail value today to 7.4 percent in 2015. In the United States, it took ten years to achieve that growth. BCG projection means that China will surpass the United States to become the largest e-commerce market in the world, achieving a compound annual growth rate of 33%, to reach more than RMB 2 trillion.

Also read:: China’s Luxury Online Shopping Reached 3.5B RMB in Q2

Taobao Mall

November 11 (11-11) is Singles Day in China and year 2011 makes this date more special with six “1″s. And, this date is even a bigger date for China’s online retailers.

Let’s take a look at how crazy China online shoppers can be on Nov 11 2011 on Taobao Mall (all participating merchants offered 50% discount):

• At 00:08 (just eight minutes after the promotion started), total transactions totaled 100 million yuan
• 21 minutes: exceeded 200 million
• 32 minutes: exceeded 300 million
• 1 hour: 439 million
• at 10am (10 hours): 1 billion yuan
• at 4pm: 2 billion yuan with over 10 million orders

Turnover via Alipay totaled 3.36 billion yuan (USD 530 million) on Taobao Mall, and 5.2 billion on Taobao.com and Taobao Mall combined on November 11, 2011.

Also read:: Taobao Launched Electronics Mall

Google Shihui

Google China launched a daily deal aggregation website in beta named “Shihui” which means economical and practical in Chinese.

Users can browse or search daily deals in a specific city by site, product category, price and discount on Google Shihui.

Also read:: Google launched Chinese version of its merchant center service

eTao.com

eTao, Alibaba’s online shopping search engine, announced its plan to provide seamless one-stop online shopping experience for internet users.

eTao is a comparison shopping search engine and currently it has indexed over 600 million product items covering over 2,000 b2C merchant and 660 daily deal websites. The new feature enables uses to login with either Taobao account or Alipay account, search and purchase goods on eTao without requiring another login.

Currently Taobao has over 370 million registered users and Alipay over 500 million.

eTao also created a new page displaying real-time discounted products.

Also read:: China Online Shopping Report 2009: Apparel and Home Acccessories the most popular

China Online Luxury Revenue in 2011

China’s second quarter luxury online sales reached 3.45 Billion yuan (about USD $540 million), according to Chinese research company Analysis International.

By 2015, China is expected to have more than 4 million wealthy households, making it the world’s fourth-largest country in terms of its number of wealthy households after the United States, Japan, and the United Kingdom, says a report by McKinsey & Company. The number of wealthy households—defined as urban households with annual income in excess of 250,000 renminbi—reached 1.6 million in 2008.

Also read:: China Online Shopping Market Reached 179.2 Billion Yuan in Q2

Top 10 B2C Platforms in Q2 2011

Top 10 Online Retailer in Q2 2011

The revenue for B2C platforms is commission based while B2C online retailers source products and sell.

Also read:: Charts: Top 10 Online Shopping Provinces & Cities in Q1 2011

China Online Shopping Revenue 2010-2011Q2

China online shopping market reached 170.2 billion yuan in Q2 2011, up 76.7% compared to Q2 2010.

Among C2C websites, Taobao is still the dominant player with 90.3% market share, followed by Tencent’s Paipai with 9% market share. eBay’s eachnet has a tiny share of 0.7%.

Also read:: China Online Shopping Statistics 2009 Part 3 – Top C2C Websites

Taobao's Image Search Engine: Imagine

Last Tuesday, Taobao launched their image search engine Imagine for online shoppers. The idea is simple: if a Chinese netizen sees something she likes and wanted to buy, she can search for that product as long as she has the image of that product.

Users can upload a photo or enter the URL of a photo and specify a product category to conduct search. However, so far it only supports clothes, shoes and women handbags.

As a quick experiment, I found the URL of a Burberry handbag on Google Image search:

Taobao Image Search: Burberry Bag

Then here is the search results I got:

Taobao Imagine Search Results

Pretty accurate! It display how accurate each result is with a price tag as well. Users can also filter the results on a sidebar by style, shape, patterns and material. And, the search history will be kept and displayed on the sidebar.

Clicking on any product image will direct the searcher to the specific product page on Taobao.com.

Also read:: Chart: Taobao Online Shoppers Behavior

Top 10 Online Shopping Provinces in Q1 2011

According to EcommercePlus data, the top three provinces by total online purchase orders are Guangdong, Zhejiang and Jiangsu; the top three cities are Guangzhou, Beijing and Shanghai.

Top 10 Online Shopping Cities in Q1 2011

Also read:: Top 10 Provinces by No. of Online Shopping Transactions in 2010

Browsing Time of Taobao Users

The above graph from iResearch shows that China’s online shoppers are more active in workdays than weekend except for evening time on weekends. If we take a look at Amazon.com’s traffic trend in May, it seems to conform to the finding:

More than 80% of shopping actions are done in 30 minutes, and only few continue for more than 30 minutes or even one hour:

According to iResearch, most Taobao users go through three steps in online shopping:

1. Visit home page
2. Log on and search
3. View commodities

In the second and third steps of shopping process, some users go back to home page of Taobao.com mainly because he or she looks for certain product category or management function. Therefore, home page of a website continues to play a crucial part in online shopping paths.

Online Shopping Funnel & Visit Frequency on TMall.com

TMall.com was Taobao’s B2C site and is now split out as a separate company.

Also read:: Taobao Imagine: An Image Search Engine for Shoppers

Chart: Unsatisfied Online Shopper

According to a survey conducted by iResearch during last December and this January, almost half online shoppers will complain by making a phone call to the customer service and leave a complaint on online retailer’s website.

Nearly 20% unsatisfied online shopper will simply never buy from that online retailer; a small percentage of online shoppers may complain in online forums, to Consumer Association, on Weibo and etc.

If you’re in online retail business in China, you better provide phone support as an important channel of your customer support. And if you don’t set up this direct two-way communication bridge between you and your customers, you leave them no choice but to say all bad things about you and you may never know.

Also read:: Chart: Taobao Online Shoppers Behavior

China Retail Sales of Consumer Goods

Also read:: Taobao Sales during Golden Week Reached 8 Billion RMB

Total online transactions on Taobao Mall exceeded 30 billion yuan (about USD$4.6 billion) in 2010.

Also read:: A Record Single-day Turnover of 3.36 Billion Yuan Taobao Mall

Groupon has finally launched their deal in China on Gaopeng.com, in collaboration with Tencent.

One powerful feature of the website is that users can login with their qq account and accumulate rebate points (what Tencent call “Caibei” points). Considering there are over 600 million active users on QQ platform, this is no doubt a powerful integration.

Groupon’s success in the states has spurred the launch of many group buying websites in China; how are they doing so far?

Top Group Buying Websites in China

Juhuasuan (means “great deal” in Chinese) from Taobao is so far leading the race with almost 76 million visitors per month according to data from iResearch. Their visitors are the most active ones with an average 6.63 visits per visitor every month.

Also read:: Taobao’s Groupon clone sold 200 million in 2010

Groupon China’s website “GaoPeng.com”, a joint venture with Tencent, has officially launched today. Group buying deal is not available yet until March 2011.

Users can sign up in one of eleven cities in China:

• Beijing
• Shanghai
• Guangzhou
• Shenzhen
• Chengdu
• Hangzhou
• Wuhan
• Chongqing
• Tianjin
• Nanjing
• Suzhou

According to Sohu IT News, deals will be available in Shanghai and Beijing first with a focus on local food and lifestyle.

Also read:: 2008 China Laptop Market Internet Users Study

Groupon China’s joint venture with Tencent will launch their website “Gaopeng.com” next week.

A reporter at Jinghua newspaper managed to open gaopeng.com though there is no products available yet. After he registered his email, he received a note saying that “This website will be officially launched next week” signed by “Team Gaopeng”.

I just tried but failed to open this website. Interestingly, the meta data from top four search engines in China can give you a brief history about this domain:

Gaopeng.com was originally a forum for IT teachers of primary and secondary schools.

Google search result page shows Groupon title with old description of old website.

Baidu shows the most recent page on gaopeng.com and its last crawl was today:

The meta data on Baidu shows:

Explore and experience Gaopeng now! Enjoy up to 30% discount.

On its cache page, it shows only one option for “city”, which is Beijing. It’s not clear yet whether there will be multiple cities at its launch.

It asks for the city and email address as it’s used to in other cities in the world. Email usage is not as high as it is in other parts of the world and it could be very low in some cities in China. So, their subscription approach is not impressive at all.

My advice is, utilize the growing popularity of social networks and microblogs. Well, they may come up with something more tailored for Chinese market at its launch next week. There’s no reason Tencent doesn’t make advantage of its powerful social networks to promote Groupon China website.

According to sources at Tencent, Groupon China will focus on travel, food and Tencent’s virtual currency. And, yes, one product only every day.

Another interesting thing is, Groupon China will have a different feature in Chinese market. Users can raise a group buying request with desired price for a product; and, merchants can follow this demand and make a deal when the total users for this product reach a certain number.

We will certainly know more next week.

Also read:: Groupon China Website “Gaopeng.com” Officially Launched

Guangdong is the number one province in online shopping by the number of confirmed orders, according to data shared by research firm iResearch, followed by Zhejiang and Jiangsu province.

Also read:: Charts: Top 10 Online Shopping Provinces & Cities in Q1 2011